No relief for RCom as NCLT continues stay on asset sale

In case the deal does not see the light of the day before March-end, lenders can drag the company to NCLT under the Insolvency and Bankruptcy Code.

Reliance Communications is desperately looking to sell off its tower business by March-end. &nbsp | &nbspPhoto Credit:&nbspBCCL

New Delhi: The National Company Law Tribunal (NCLT) continues the stay on sale of Reliance Infratel assets to any third party till further orders, making the situation tougher for the parent company Reliance Communications (RCom), reported The Economic Times. RCom plans to sell its tower business and fibre to Mukesh Ambani's Reliance Jio in a bid to pay off its lenders by the end of March. An RCom spokesperson issued a statement on Monday, saying that the company would immediately appeal with the National Company Law Appellate Tribunal (NCLAT) for "vacation on the stay, to protect the interests of our secured lenders."

"It is to be noted the stay granted by NCLT today relates only to RCOM's tower and fibre assets and does not apply to spectrum, MCNs (media convergence node), real estate, etc," the spokesperson said.

A Mumbai Bench of the NCLT, comprising BSV Prakash Kumar and Ravikumar Duraisamy, passed the stay order on the sale of assets after HSBC Daisy Investment- a minority stakeholder in Reliance Infratel, contested the plea request as its consent was not sought before taking any action. The counsel representing HSBC Daisy Investments had earlier said that it would be an “oppression of a minority shareholder under section 397 and 398” as Reliance Infratel would become defunct.

The minority company has a five percent share in RCom's tower business after it invested around Ras 1,100 crore in July 2007. NCLT rejected Reliance Infratel's petition, which had sought the dismissal of HSBC Daisy Investments' plea seeking a stay on sale of tower and fibre assets. As of now, the NCLT has directed Reliance Communications to file its response within three weeks, following which HSBC Daisy Investments would be required to file a rejoinder. It may be noted that the entire process is expected to go beyond the asset sale deadline.

In a statement, RCom said: "We expect our secured lenders to also take appropriate steps for the expeditious completion of processes transparently run by lenders for monetisation of their securities, and realisation of their dues."

“As legally advised, the claims of minority investors and / or unsecured vendors cannot under any circumstances rank in higher priority than the undisputed claims of secured domestic and international lenders, and any stay granted in this regard is not defensible in law and liable to be vacated," it added.

Anil Ambani's Reliance Communications is rushing to sell its tower and optic fibre assets - under Reliance Infratel - to Jio for Rs 8,000 crore, according to the report by The Economic Times. Out of the total amount, Rs 5,000 crore of assets consists of land and towers. In addition to these, the sale of spectrum and switching nodes to Jio (part of the entire deal), is approximately worth Rs 25,000 crore. The amount would be used to pay at least 35 lenders and cut off a significant amount from its Rs 45,000 crore debt. In case the deal does not see the light of the day before March-end, lenders can drag the company to NCLT under the Insolvency and Bankruptcy Code.

No relief for RCom as NCLT continues stay on asset sale Description:In case the deal does not see the light of the day before March-end, lenders can drag the company to NCLT under the Insolvency and Bankruptcy Code.
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